Dear Ladies and Gentlemen
There is no magic! Financial well-being and prosperity need a minimum amount of economic growth.
You know, I received a fair amount of positive feedback to Anton’s article on increased productivity and economic growth thanks to cheap and all time readily available (fossil) energy and again, Ladies and Gentlemen, there is no magic, economic growth demands cheap and 24/7 readily available energy.
… and without economic growth, large parts of populations will not be able of keeping their standard of living on current levels and even less of increasing it, unfortunately there is no magic there either.
I believe if large parts of a population feel economic pressure, eventually those people will want to vent their feelings, and this may lead to unpredictable and inconvenient consequences. The yellow vests movement in France is only one very recent example right in front of our doorsteps.
The cost of such protests is enormous and, there is again no magic, will have to be borne by the country’s population. While the wealthier cohort will not really feel any impact, it is a twist of fate that the less fortunate cohort, the ones that are in the street protesting for a better life, will be hurt even more over time through indirect tax increases, inflation, general increase in cost of living.
The question for me and my readers is how to invest in such an environment. I firmly believe there is again no magic. If you want to have some sort of cash return on your assets in a 0% or negative interest environment, you can get it by accepting volatility. If you are ready to accept volatility you can have easily 4% – 5% cash return on your investments. But volatility is not for everyone. People get very quickly very nervous. Long term statistics show that equities beat bonds but the price you pay for the extra performance of equities over bonds is volatility. No magic, Ladies and Gentlemen! I don’t mind volatility; I prefer low volatility to high volatility, but I don’t really mind it that much.
Besides equities, where do you want to invest your money and receive a cash return if not in equities?
What is your opinion, Ladies and Gentlemen, as Anton did, please share your thoughts, ideas and/or experiences with me and my readers, but please don’t forget (instead of hitting the reply button) to send your messages to:
smk@incrementum.li
Many thanks, indeed!
And now, Ladies and Gentlemen I wish you a great day and weekend.
Kind regards.
Yours truly,
Stefan M. Kremeth
Wealth Management
Incrementum AG
